Better.com CEO Vishal Garg admitted to employees that he “personally guaranteed” the $750 million cash injection provided to the online mortgage lender last November in an email seen by TechCrunch.
Let’s start at the beginning. Last May, Better.com announced it was going public through a SPAC that would value the company at nearly $7 billion. Then, on November 30, the company announced that blank check company Aurora Acquisition Corp. and SoftBank had decided to change the terms of their funding agreement to provide Better with half of the $1.5 billion they had committed immediately instead of waiting for the deal to close.
But what wasn’t revealed at the time, as Fortune reported last week, is that when SoftBank released that $750 million in November, it was Garg — not the company as a whole – which assumed responsibility for compensating the Japanese investment conglomerate for any losses.
Specifically, an Aurora S-4 filing states:
Top Founder and CEO, in a personal capacity, has agreed to enter into a side letter with SoftBank, pursuant to which he may be liable for losses realized or receive payments under certain circumstances from SoftBank in connection with the post-closing convertible notes, which could divert the resources and attention of the best founder and CEO of our company and negatively impact his personal financial situation.
Notably, the amount of losses covered by the side letter is not capped, and Garg alone “remains responsible for all such losses, which could require him, among other things, to sell a significant portion of his stock holdings. shares of Better Home & Finance, which could have a negative impact on the price of the common stock of Better Home & Finance.
As mentioned above, in response to the details of the arrangement made public, Garg sent an email – viewed by TechCrunch – to all current Better employees acknowledging personal responsibility for the $750 million injection. In the email, he admitted that he “personally guaranteed” SoftBank $750 million of the $1.5 billion SoftBank agreed to invest in November last year because he “wanted capital to build our dream”, knowing that “the world was about to get ugly. He wrote:
I may be stupid, but I believe in us. I believe in you. I believe in our mission. I believe in our vision. And I believe we are the only ones on this planet who will do whatever it takes to make home ownership better, faster, cheaper, and possible for everyone everywhere…. I am fully committed to everything I own and will ever own… In five years, when this $750 million SoftBank loan matures around my 50th birthday… if that means I have nothing. Well, at least we’ve given it a real shot… It’s true. I have personally guaranteed three quarters of a billion dollars and I am personally responsible for it.
Meanwhile, multiple sources have also shared that Better.com has in recent weeks offered its workers in India the option to leave under a voluntary separation agreement. Apparently more workers raised their hands – 90% of the 2,100 – than the company expected and it had to limit the number of workers who could leave.
Sources said it was mainly “farmers and analysts” who were allowed to leave, and about 920 workers in total had their resignations accepted. One person shared an email from HR India rejecting their claim saying the worker was “part of a mission critical team” of Better. A separate email sent to the company’s operations team outlining a structural reorganization said the need to offer voluntary separation to the company’s Indian employees was due to the recognition that “there are and responding to future declines to ensure Better is positioned for profitability remains essential. ”
Better did not respond to requests for comment.